enterprise cloud adoption survey results

August 2012

Enterprise Cloud Adoption Survey – Results Cloud Adoption Survey – Res

Proprietary & Confidential. © 2012, Everest Global, Inc. 2

Executive Summary

Detailed findings

Appendix - Demographics

Content


Context and methodology

Cloud Connect and Everest Group conducted a joint survey to coincide with the Cloud Connect conference in Chicago, September 2012

The objectives of the survey were to: – Identify broad-based cloud adoption patterns – Identify barriers to adoption – Evaluate overall "cloud sentiment” post adoption

Context & Objectives

Cloud Connect and Everest Group jointly created an online survey for the purposes of this study Survey invitations were sent by email to three primary groups of cloud market stakeholders:

– Cloud Buyers: Enterprises that have adopted, or are looking forward to cloud solutions – Cloud Service Providers: Providers of cloud solutions (products and services), including ISVs and

service providers – Cloud Advisors: Consultants and third party advisors who work with Cloud Buyers and provide

guidance on cloud adoption strategies Survey responses were aggregated and analyzed; wherever possible and insightful, viewpoints from

different market constituents have been contrasted The focus of the study is on evaluating the viewpoint of the Cloud Buyer; however, given the sample size of

Cloud Buyers, and the random sampling methodology, analysis by different segments within the buyer community has not been attempted, as the results would not be statistically significant

Methodology


Key findings (1/2)

While existing adoption remains strongest within the SaaS layer, cloud infrastructure models are expected to provide the next impetus to growth; private cloud models are expected to grow the most

Early adoption workloads such as custom business applications and email/collaboration will continue to move to the cloud – However, adoption is poised to broaden with a large proportion of enterprises earmarking disaster recovery/storage/

archiving needs as part of their plans for cloud infrastructure implementation – Further, we believe that adoption patterns will be closely linked with the success of other Next Generation technologies as

legacy integration challenges will be easier to resolve. For instance, with the advent of Big Data themes, a significant number of enterprises are planning to move their BI/Analytics workloads to the cloud

Cloud adoption is expanding beyond “low hanging fruit” such as email and custom applications

The ability of cloud technology to bring down enterprise’s time to market for applications, solutions and products is one of the strongest drivers of adoptions – Further, buyers record high post adoption satisfaction scores in their ability to shrink time to market

The ability to create and provision flexible infrastructure in line with demand patterns is rated as the second most important driver of adoption

While buyers maintain that TCO reduction objectives rank low in the hierarchy of drivers, service providers mention this as the strongest driver for their customers

Cloud is seen as an enabler of topline growth, beyond the cost reduction imperative

All market constituents unanimously agree on “security concerns” being the biggest barrier to cloud adoption However, it is interesting to note that service providers rank “lack of management buy-in” as an important barrier, which is at

odds to buyer sentiment – This is good news for challengers seeking to account entry, as it clearly indicates that established incumbents are

grappling with decentralized budget centers, as traditional IT roles are being blurred within the cloud context

Perceived “security issues” continues to be the most significant barrier to adoption


Key findings (2/2)

19% of responses indicated no strong preference towards virtualization technology vendors, next to 47% for VMware 14% of responses indicated a strong preference for opensource cloud infrastructure platforms, next to 34% for VMware; 25%

of responses indicated no strong preference

While VMware has leading mindshare, many enterprises prefer opensource technology

An overwhelming majority of Cloud Buyers expressed high levels of satisfaction on their cloud implementations Highest satisfaction is recorded on buyers’ ability to create flexible infrastructure Most importantly, cloud computing is not going to be another flash in the pan. An overwhelming majority of survey

respondents underlined their commitment to move larger chunks of their IT establishment to the cloud, as they expect to derive greater business value from cloud technologies in the future

Overall, buyers’ “cloud sentiment” remains extremely positive, with high expectations for the future

Enterprise adoption is being driven primarily to improve responsiveness (reduced provisioning cycle times) and flexibility without increasing IT spend; adoption is being driven by business users whose management teams are “bought in” and supportive

Service providers, on the other hand, believe that adoption is being driven primarily to reduce IT costs by management teams that aren’t fully bought in yet

We believe that as cloud technology simplifies IT consumption (e.g., small-scale SaaS consumption and virtual instance provisioning), traditional IT procurement roles are increasingly being driven by business users. Developer teams embedded in BUs do not need corporate IT buy-in for routine cloud usage, consequently leading to “budget shifting” away from traditional buying centers

Service providers need to adapt to the “Next Gen Buying Center” and shift discussions away from the traditional cost-based value proposition

Service providers need to adapt to new budget centers and sell on business value rather than cost


Executive Summary

Detailed findings


Content


SaaS modules have been adopted most widely; IaaS adoption is expected to grow fastest in the near future

Already adopted Adopt in distant future

Adopt in near future No plans to adopt

Enterprise cloud adoption trends by cloud layer – Buyer responses

57%

38%

31%

30%

28%

17%

28%

25%

26%

36%

27%

27%

10%

27%

26%

23%

22%

36%

5%

10%

18%

11%

23%

20%

Software as a Service (SaaS)

Platform as a Service (PaaS)

Public cloud (IaaS)

Private cloud (IaaS)

Business Process as a Service (BPaaS)

Hybrid cloud (IaaS)

N= 81

N= 73

N= 78

N= 80

N= 64

N= 70

IaaS adoption plans - Buyer responses

48%

34%

18%

Plan to implement cloud infrastructure

Already have cloud infrastructure

No plans for cloud infrastructure

100% = 89


Amongst those planning IaaS implementation, VMware enjoys dominant mindshare

Preference for virtualization technology Buyer responses (cloud infrastructure implemented/planned)

47%

19%

18%

9% 6%

100% = 95 (number of mentions)

VMware

No preference

Microsoft Hyper-V

Xen

KVM

Preference for cloud platform Buyer responses (cloud infrastructure implemented/planned)

VMware

No preference

OpenStack

IBM SmartCloud

CloudStack VCE

100% = 104 (number of mentions)

However, a significant proportion of the market professes to be platform agnostic, or prefer open source platforms

34%

25%

14%

12%

9% 4% 3%

Eucalyptus


Email/collaboration, DR/storage, and BI/analytics being targeted for cloud porting; as buyers think beyond custom applications and development platforms

Already migrated

Currently migrating

Future migration planned

No migration planned

29%

28%

25%

25%

22%

19%

18%

25%

17%

16%

20%

25%

16%

19%

28%

31%

46%

42%

32%

39%

25%

19%

24%

13%

14%

22%

26%

37%

Application development/test environment

Custom business applications

E-mail/collaboration

Disaster recovery/storage/data archiving

E-commerce and on-line tools

Business intelligence/analytics

ERP

Enterprise Cloud adoption trends by workload – Buyer responses

N= 80

N= 75

N= 80

N= 80

N= 79

N= 74

N= 67


Vast majority of buyers met their “cloud objectives”; more than cost reduction, cloud enables flexible infrastructure and reduce time to market…

18% 23% 19% 16%

25%

38%

25% 27%

21%

21%

27% 24%

31%

14% 24% 27%

1% 2% 2% 1%

N = 88

Strongly agree

Agree

Somewhat agree

Neither agree or disagree

Somewhat disagree

We met our objectives for cost savings

We met our objectives for flexible infrastructure

We met our objectives for quicker time to market

We met our objectives for higher satisfaction of business units

Disagree Strongly disagree 2% 1% 1%

2% 2% 1% 2%

64%

82%

71% 67%

2%

XX% Overall agreement % Enterprise Cloud adoption – objective fulfillment Buyer responses


… both of which are top adoption drivers for enterprise buyers; however, supply side constituents view cloud adoption to be driven primarily by cost reduction imperatives

3.21

3.21

3.13

2.63

2.56

2.49

Reduced time for provisioning

application/infrastructure

Flexible infrastructure capacity

Limited in-house technical resources

Desire to "variabilize" cost

Reduction in TCO (Total Cost of Ownership)

Industry-specific reasons N = 81

N = 84

N = 79

N = 82

N = 81

N = 82

Relative importance of adoption drivers Buyer responses

1 = not at all important; ………. 5 = very important

3.33

3.27

3.25

3.03

2.71

2.37

Reduction in TCO (Total Cost of Ownership)

Flexibile infrastructure capacity

Reduced time for provisioning

application/infrastructure

Desire to "variabilize" cost

Limited in-house technical resources

Industry specific reasons

N = 184

N = 193

N = 186

N = 191

N = 193

N = 193

Relative importance of adoption drivers Service provider/advisory responses

1 = not at all important; ………. 5 = very important


Adoption is by and large driven non-vertical solutions; however, industry-specific adoption patterns point towards significant impact on customer facing processes

Industry specific reasons for cloud adoption Buyer responses

“…make changes quickly to web hosted customer portal”

“… to serve the needs of our clients – through (dynamic) communication, and data analytics”

“… support with products and services, our customers who wish to operate within the public cloud.”

Buyerspeak: Industry specific cloud solutions enable us to…

General solution

Combination (industry-specific and general

solutions)

Industry-specific solutions

100% = 89

Industry specificity of cloud adoption Buyer responses

69%

17%

15%


Security and integration issues are barriers to adoption; contrary to buyer perception, service providers cite lack of buy-in as a more significant barrier than budget issues Barriers to enterprise cloud adoption Buyer responses

3.31

2.92

2.77

2.70

2.69

2.60

2.48

Security concerns

Integration of cloud solutions

Lack of management buy-in

Lack of budget for new initiatives

Lack of in-house capability to evaluate cloud solutions

Lack of suitable cloud solutions

Fear of vendor lock-in N = 193

N = 191

N = 195

N = 193

N = 190

N = 196 2.93

2.73

2.58

2.49

2.42

2.39

2.26

Security concerns

Integration of cloud solutions

Lack of budget for new initiatives

Lack of suitable cloud solutions

Lack of in-house capability to evaluate cloud solutions

Fear of vendor lock-in

Lack of management buy-in

N = 80

N = 83

N = 83

N = 81

N = 81

N = 83

N = 81

Barriers to enterprise cloud adoption Service provider/advisory responses

Service providers need support from stakeholder groups in order to generate buy-in across the enterprise

1 = not at all important; ………. 5 = very important 1 = not at all important; ………. 5 = very important


Buyers are willing to change service providers for the right contract terms, while service providers believe the reputation and tenure of the provider is more important Cloud solution purchase – decision criterion Buyer responses

3.65

3.45

3.24

3.11

2.90

2.55

Security of the offering

Reputation and tenure of the provider

Contract terms and SLAs

Case studies / client referrals / track record

Low price

Physical location of facilities delivering

cloud services N = 193

N = 194

N = 193

N = 192

N = 193

N = 194 3.50

3.34

3.29

3.05

2.72

2.66

Security of the offering

Contract terms and SLAs

Reputation and tenure of the provider

Case studies / client referrals / track record

Physical location of facilities delivering cloud

services

Low price

N = 83

N = 83

N = 84

N = 82

N = 82

N = 84

Cloud solution purchase – decision criterion Service provider/advisory responses

Security features continue to be the top decision criteria

1 = not at all important; ………. 5 = very important 1 = not at all important; ………. 5 = very important


IT, in conjunction with business leadership, comprises the primary decision-making group for cloud adoption

Stakeholder involvement in cloud solution purchase Buyer responses

Compared to other IT purchase decisions, cloud investments attract higher involvement from CXOs

67

51

39

28

7

IT function C-level executives Business units Finance function No formal effort to develop enterprise

cloud strategy

N = 192 (number of mentions)


Enterprise adopters express strong satisfaction and remain extremely optimistic about their ability to generate business value from cloud solutions Chart title Number of respondents

14% 13% 9%

34% 13% 19% 29%

42%

35% 23%

26%

12%

16% 22%

16%

12%

14% 7%

11%

5% 13%

6% 4% 4% 4% 1%

We have a robust strategy for managing our adoption of cloud solutions

Strongly agree

Agree

Somewhat agree

Neither agree or disagree

Somewhat disagree

Disagree Strongly disagree

In comparison to other organizations, we are more mature in our approach to cloud solutions

We are satisfied with the current results from our cloud initiatives

We expect to achieve greater benefits from cloud solutions in the future

62%

55%

64%

88%

N = 86

XX% Overall agreement %


Executive Summary

Detailed findings


Content


Survey demographics

Number of respondents; 100%=346

Enterprise / cloud service buyer

Third-party cloud solution provider

Advisory professional

37%

32%

31%

68%

15%

12%

4%

North America EMEA

APAC

Latam

Buyer responses by geo; 100%=105

32%

15% 12%

11% 5% 11%

13%

< US$100 million

US$100-500 million US$500 million-2 billion

US$2-5 billion

US$5-10 billion

US$10-30 billion

> US$30 billion

100% = 105

Buyer responses by size; 100%=105

45%

21%

19%

15%

All responses by job title; 100%=261

Senior Manager

CXO

Director

Vice President


About Everest Group

Everest Group is an advisor to business leaders on the next generation of global services with a worldwide reputation for helping Global 1000 firms dramatically improve their performance by optimizing their back- and middle-office business services. With a fact-based approach driving outcomes, Everest Group counsels organizations with complex challenges related to the use and delivery of global services in their pursuits to balance short-term needs with long-term goals. Through its practical consulting, original research, and industry resource services, Everest Group helps clients maximize value from delivery strategies, talent and sourcing models, technologies, and management approaches. Established in 1991, Everest Group serves users of global services, providers of services, country organizations, and private equity firms in six continents across all industry categories. For more information, please visit www.everestgrp.com and research.everestgrp.com.

http://www.everestgrp.com/�

http://research.everestgrp.com/�


About Cloud Connect

Cloud Connect, produced by UBM TechWeb, is the defining event of the cloud computing industry. As both a conference and an exhibition, Cloud Connect's goal is to chart the course of cloud computing's development by bringing together enterprise IT professionals, developers, infrastructure and service providers and cloud computing innovators. UBM TechWeb has produced cloud events that define and frame cloud computing discussions since June 2008, including Cloud Summit Executive and Enterprise Cloud Summit at Interop. Cloud Connect is a one-of-a-kind event that encompasses the entire cloud computing ecosystem featuring IT & Developer workshops and a full conference program. For more information visit: www.cloudconnectevent.com.

http://www.cloudconnectevent.com/�


Everest Group Leading clients from insight to action

Everest Group locations

www.everestgrp.com | research.everestgrp.com | www.sherpasinblueshirts.com

Dallas (Headquarters): New York: Toronto: London: Delhi:

[email protected] +1-214-451-3000 [email protected] +1-646-805-4000 [email protected] +1-416-865-2033 [email protected] +44-207-887-1483 [email protected] +91-124-496-1000

http://www.everestgrp.com/�

http://research.everestgrp.com/�

http://www.sherpasinblueshirts.com/�

mailto:[email protected]�



